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Stryker, Medtronic gain as robot-aided surgeries grow

As robot-assisted surgeries grow, Stryker Corp. and Medtronic Inc.are gaining from investments in theses tools.

A recent study published in the Journal of the American Medical Association (JAMA) highlights how quickly robot-assisted surgeries are being adopted in American hospitals.

The study looked at almost 170,000 patients at 73 hospitals and tried to identify trends in the adoption of these surgical tools. It found that between 2012 and 2016 the use of robots for general surgery rose from 1.8% to 15.1%. Hospitals that launched robotic surgery programs had a broad and immediate increase in the use of robot systems.

The U.S. is the biggest market for robot medical aids, followed by western Europe, Japan, and China. In terms of the number of procedures each year, the one-two is U.S. and China.

The study highlights how quickly robots are being developed for surgical procedures and the frontiers of their applications.

In fact, the global robotics market is expected to see a compound annual growth rate of 25% between 2019 and 2024, according to a report by Research and Markets.  As reported by Yahoo Finance, robotic applications are spreading in all industrial areas, including healthcare, entertainment, retail, automobile and defense.

Two medical device companies that are benefitting from these trends are Stryker Corp. and Medtronic Corp. These U.S.-based multinationals are developing robotic aids and are  seeing sales growth in this area.

Intutitive Surgical robot surgery AI
A surgical robot cluster manufactured by Intuitive Surgical Inc. Credit: Intuitive Surgical

Stryker (NYSE SYK), a leader in the global medical device industry, was founded in Michigan in 1941 by Dr. Homer Stryker who believed his patients needed better medical devices to improve their lives.

Almost 80 years later, the company has three main products lines. The Orthopedics segment provides hip and knee implants. MedSurg  offers surgical equipment, including surgical navigation systems, emergency medical equipment and intensive care disposable products. The Neurotechnology and Spine segment provides  products for brain and skull surgery, synthetic bone grafts and spinal implants.

Stryker has a market capitalization of US $64.3 billion in its latest 12 months, had sales of $US14.9 billion in 2019 and employs more than 33,000 people. It continues to benefit from global trends in aging and the development of emerging market healthcare systems. Both are increasing demand for its products.

Stryker raised its dividend by 11%  last year, which is the 25th consecutive year of a dividend increase.  Its yields 1.2% at current prices.

Medtronic (NYSE: MDT) is the world’s largest medical device company with a market capitalization of US $123.63 billion. It had revenues of $31 billion in its latest 12 months and gets 60% of its sales and profits outside North America.

Medtronic is gaining from strong performance in its unit that makes surgical instruments, including pacemakers.

Medtronic has been beefing up this part of its operations through acquisitions. In May, it bought Titan Spine Inc., a company that makes titanium spacers that are inserted between the vertebrae during spinal fusion surgery. The purchase complements an acquisition of Mazor Robotics at the end of 2018. Mazor  is a specialist in robot-assisted spinal surgery. This type of surgery is a less invasive and more precise alternative to traditional open spine surgery.

Medtronic is also a dividend leader, having raised the payment for the 42nd year in a row. The rate yields 2.16 % at current prices.

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